While we await the outcome of Potts v Densley & Pays in the High Court, followers of deposit protection litigation might be interested in a case with similar facts to Potts, but a different outcome in the county court.

Gemma Shepley v Majid Yassen, Tameside County Court, Thursday 13th January 2011 (Unreported), has been spotted and commented on by Nearly Legal.

To recap, in Potts v Densley & Pays the main issue is, can the tenant sue for the usual penalties where the landlord has protected the deposit after the end of the tenancy but before the court hearing and failed to provide the prescribed information?

The Shepley v Yassen facts mirror Potts: the deposit was not protected during the tenancy, and after the end of the tenancy the tenants issued proceedings (in May 2010) for the usual remedies. The deposit was protected in August 2010 with DPS. But the prescribed information was never served on the tenants.

The (County) court held that protection after the end of the tenancy was not acceptable. The cases of Draycott and Tiensia were distinguished on the basis that in those cases the deposits had been protected late but had still been placed into schemes before the tenancy ended.

NL comments that this “seems to be absolutely correct. If a landlord can put the deposit into protection after the tenancy has ended then it makes a total nonsense of the legislation and almost encourages a “wait and see” attitude.”

Painsmith agrees. Currently no-one is sure of their position when a deposit is protected after the end of the tenancy and this is disconcerting for both landlords and tenants. With the Potts v Densley & Pays judgment still not handed down, landlords, tenants and lawyers are indeed having to wait and see, whether we want to or not. A High Court decision that deposits cannot be protected after the end of the tenancy would be welcomed.

10 Comments

I cannot for the life of me see why a landlord would want to protect the deposit after the tenancy has ended, when the simple alternative is to pay it back to the tenant. In the case I previously reported that is what the LL did and the Circuit Appeal Judge accepted that this invalidated any claim for penalties.

If tenant has the money in hand and presses on for penalties they are instantly seen as greedy and manipulative, whereas if they still don’t have their money they arouse sympathy.

I suppose that a LL who wanted to make a claim against the deposit for damage or rent arrears might think protecting the deposit a clever manoeuvre but “risky” is a far more appropriate epithet.

They would be far better off either taking the loss (safest) or making an application for damages but along with it paying into court a cheque for the deposit.

We have previously expressed our doubts as to the correctness of this course of action in law and are currently pursuing an appeal for a tenant which will ultimately, if successful, eliminate this as a course of action.

On Shepley there is a difference between, on the one hand, a landlord who will wait and see whether the tenant will press for the deposit to be protected or returned to him, and, on the other hand, the landlord who delays taking any action, or deciding what action to take, until he has more information or seeks advice. Should the court be called upon to judge the morality of either or both of them?

On Tiensia the case is factually different but the point Rimer LJ makes is that, “a scheme cannot include a reference to any time limit for securing the deposit …”…“The meaning of ‘the initial requirements’ within those sub-sections is therefore necessarily confined to what you have to do in order to protect the deposit, and does not extend to when you have to do it …” If the initial requirements does not extend to when the deposit must be protected then where does the argument that there must be a landlord and tenant relationship come from? Not section 213. That states a deposit must be protected when it is ‘in connection with’ a shorthold tenancy. The word ‘connection’ only requires some sort of relationship. There does not need to be an ongoing contract or agreement for their to be a relationship between a former tenant and his landlord -or former landlord as the case may be, What of the tenant who gives his landlord the tenancy deposit before he signs the agreement? Are they exclude from the deposit regulations because for a few moments they did not have the title ‘landlord’ and ‘tenant’? It will be interesting to see what the court makes of it all.

Just to clarify, I am “Potts”…
I had no other course of action to take open to me OTHER than the expensive Court system to obtain my deposit money (or write it off as a ‘loss’).
The DPS refused to return any of it without a court order as it was placed into their scheme a month AFTER the end of the tenancy (and after a court case had started) and thus they had no legal say on what happened to the money until the Court ruled.
All messy, but it has cost me thousands to obtain the Court to order the deposit return out of the DPS. No costs awarded from the Court system means that I am severely out of pocket, and even the penalty (had it been applied) would not have covered the costs of the Court system!

@ Potts. Is it not possible to reclaim the costs from the landlord if you are successful in your claim? Also, my landlord has failed to protect the deposit after the end of the deposit, even though I have given him plenty of time to do so.

In light of the Tiensia Appeal ruling, my understanding is that the issue of failure to provide the Prescribed Information was not addressed. I have been served with Notice to End my tenancy but have never been issued with the Prescribed Information. Due to issues regarding disrepair and other issues, I have put in a claim through Moneyclaim for failure to provide the Prescribed Information and other failings. It seems likely that it will be November before the case is heard at my local small claims court. If the landlord provides the Prescribed Information before the case goes to court will the court throw out the case?

The issue over the prescribed information was not dealt with in the Potts case because it had not been pleaded. Therefore we do not have a judgement on the Prescribed information. You are warned that unfortunately decisions are not being made in the tenants favour but please do let us know how you get on.